Rupiah leads Asian currencies advance

The Indonesian rupiah led Asian currencies higher on Thursday as investors flocked to riskier assets amid hopes of a global economic recovery, but gains were capped by weaker-than-expected China growth data. The high-yielding rupiah rose as far as 10,650 per dollar in early trade, up 2.4 percent from Wednesday, as dealers cited the flow of foreign money into the country's debt market.
"We see a lot of inflows from foreign investors," said a trader in Jakarta. But the rupiah retreated to 10,725 after China's data showed country's economic growth slowed to its weakest pace on record as the global crisis put brakes on its exports. China's economy grew a weaker-than-expected 6.1 percent in the first quarter, but an improvement in data for March offered tentative signs that the worst may be over.
Other Asian currencies also felt the impact, with the Malaysian ringgit pulling back to 3.585 per dollar, still up almost 0.6 percent from Wednesday's close, after hitting an intraday high at 3.58. The Singapore dollar retreated to 1.4980 per US dollar from its intraday peak of 1.4957 hit before the Chinese data.
"The softer headline GDP data caused a knee-jerk reaction to buy dollar, sell Australian dollar and Asians," said Thio Chin Loo, currency strategist at BNP Paribas. "But we believe that with data 'less bad' (evident in March data) and Chinese reflation to remain intact, with talk of potentially another fiscal package to stimulate growth, the recent optimism is unlikely to be washed out totally," she said.
The MSCI index of Asia-Pacific stocks outside Japan gained 1.2 percent as, setting a positive background for Asian currencies. Meanwhile, the Thai baht edged up to 35.31 per dollar after the end of violent protests that further dented confidence in the economy.
In the less liquid offshore market, the currency rallied to 35.34, having risen from lows of 35.66 hit on Monday and Tuesday. "The situation is back to normal, so onshore baht is still at the same level as before the holiday," said a trader in Bangkok.